First, I wrote that RSI(2) will not work in a bear market as a response to TRO's claim that it comes with guarantee of satisfaction in all markets―bull, bear, and everything in between.

Second, a backtest based on the past performance (especially in a raging bull market that we've been in) is hardly a good gauge to measure the likely success of this indicator in the future, especially a changing market.

Third, no matter how worthless RSI(2) might be, TRO will very likely exercise his cliché, "it's not what you trade, it's how you trade", to lay the blame on the user and not the indicator. I consider that a bad faith.

Note that I just ran ure filter and got three matches: ESRX, DDR, MENT.

Since ure a mechanical trader, I take it that you'll scoop up all three stocks at the open tomorrow? I need not remind you that you cannot "selectively" choose the stocks lest the result of ure backtest be wildly skewed. The 98.29% W/L ratio is no longer a reliable figure. I hope to illustrate that numbers based on backtest aren't so easy to implement in reality.

First, I want to clarify that ESRX just split 2:1 so it's not a weak stock.

Statistically, if I consistently have a win rate greater than 90% , 10% of my options are worthless but the rest 90% will double in price.
This is just an exercise for me to understand how to use RSI(2) < 1 . By itself, it's not a very good filter because one is buying a falling stock ( like catching a falling knife). But in conjunction with weekly RSI(14) and PE, it can be a very powerful filter.
I apreciate your comments.

I have found some success daytrading stocks that have been in an uptrend for at least 50 days. I use a filter that spots trading candidates where the close been above the MA(50) for the last 100 days. The average volume(10) is above 2 million, and the stock price is above 70. The low 1 day ago was touching ma(50) and close today is above close 1 day ago. Intraday I have found consistently, that these stocks trade down near the low of 1 day ago. That is when I make my commitment. Usually I have 4-5 trading candidates a day. I daytrade the options. My stop loss is the MA(50), if the close is below I exit the trade. This should not be an ironclad stop loss. Many many times I have exited a trade for a loss and within the next day the stock gains wind. There is nothing more upsetting than watching this. Makes you forget all the times the stop loss was a lifesaver. As far as the winners go, I suffer from major league anxiety, fearing that a profit will slip away. So out I go, only to watch in utter horror while the stock makes the next leg upward. I am sure when I say this, there are a few of you who are firsthand witnesses to the same sad story. So TRO I would agree with you, it is how you trade it. There is no perfect system, where everything is a winner. If you can make your daily bread, be satisfied and then go fishing.
Bob

Forgot to mention a little tidbit. I have been hammering xom options for the last 2 months. Strictly the calls. I keep on my screen the SPY and DIA 15 minute chart. The SPY,DIA telegraph the next move in XOM. On a 15 minute chart if the SPY or DIA are exceeding the previous 15 minute high, it is as close to a sure bet XOM will start a move upward. It seems to me that the DIA, and SPY precede the move in XOM more often than not. Plenty of volume in the options,(liquidity is not a problem) and the spread most times is less than 10 cents. Good luck and happy trading.

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